Opinions
Kevin Hall BComm, CFA
Calpine Power Income Fund
CF.UN-T
BUY
May 05, 2006
Very complicated story with a lot of moving parts. Their parent is going through bankruptcy procedures and they still own some of this company. A lot of uncertainty. Good buying opportunity. Over the next couple of months, the story should get a lot cleaner.
$9.150
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DON'T BUY
The issue on this one is not the underlying assets, but is the contracts between it and its California parent which is in financial difficulty. If the parent company were out of the equation, it would have distributable cash flow of roughly $0.69. Would be a buyer in the mid $7’s.
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BUY
Calpine Corp. in California is going into bankruptcy protection and this trust contracts with them which created a lot of concerns. There is definitely a risk of distribution cut of 25% but the drop in price has fully reflected this and was very pessimistic. Very solidly run business. Below $9 it is a good buy and in the drops below $8 it will be a good take a candidate.
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